Catalan trade passing the Brexit test

Over­com­ing ob­sta­cles

Where Cat­alo­nia is con­cerned, a year after the im­ple­men­ta­tion of Brexit most busi­ness peo­ple and eco­nomic ex­perts agree that Cata­lan busi­ness is largely over­com­ing the ob­sta­cles caused by the UK’s de­par­ture from the EU. Re­cent data from the Barcelona Cham­ber of Com­merce, cov­er­ing Jan­u­ary to Sep­tem­ber last year, show that Cata­lan ex­ports to the UK stood at 2.87 bil­lion euros, 22% higher than in the same pe­riod in 2020, a year in which the pan­demic se­verely af­fected sales abroad. If we look at the same pe­riod be­fore the pan­demic, in 2019, the fig­ure is 11% lower. How­ever, it must also be re­mem­bered that in 2019, with Brexit im­mi­nent, many com­pa­nies ad­vanced ex­port and im­port deals, mak­ing it an ex­cep­tional year in terms of Cata­lan-UK trade.

Marín Or­riols, in­ter­na­tional di­rec­tor of the Barcelona Cham­ber of Com­merce, says that the UK is Cat­alo­nia’s fifth largest trad­ing part­ner, with sales there equiv­a­lent to 5% of Cata­lan GDP. The sales are mostly in three sec­tors: au­to­mo­tive (35% of the total), food (15%) and chem­i­cal (15%). De­spite a dif­fi­cult process of pre-Brexit ne­go­ti­a­tion, Or­riols is op­ti­mistic about the fu­ture trad­ing re­la­tion­ship with the UK. “With­out Trump’s in­flu­ence and with things sta­bil­is­ing in Brus­sels, it raises a sce­nario in which the UK’s re­la­tion­ship with the EU could re­sem­ble that of Switzer­land or Nor­way,” he says.

The cham­ber an­a­lyst re­calls that in the first half of 2021 ex­ports to the UK – al­ways with the caveat of Covid and its ef­fect on ac­tiv­ity – fell by 60% be­cause “the reg­u­la­tory frame­work was not yet clear, cus­toms were not pre­pared and this in­flu­enced the traf­fic of goods, as there were sat­u­ra­tions, de­lays and breaks in the pro­duc­tion chains.”

The Cham­ber’s ex­pert points out that, al­though the UK is now non-EU, there are vir­tu­ally no lim­its on the ex­change of goods under the new im­port and ex­port regime. “We can im­port and ex­port with­out quan­tity lim­i­ta­tions,” he says. But there are other as­pects that have meant a greater bu­reau­cratic bur­den for com­pa­nies here and over there: cus­toms for­mal­i­ties, with the cost in time and money that they en­tail. An ex­am­ple would be the ob­sta­cles to Just-in-Time, the in­ven­tory man­age­ment method in which goods are re­ceived from sup­pli­ers only as they are needed, in order to min­imise the costs of pro­duc­tion and stor­age. “With Just-in-Time, going through cus­toms, pass­ing in­spec­tions, as in the case of med­i­cines or food, in­creases pa­per­work, goes against free trade and is less com­pet­i­tive,” says Or­riols, who is con­vinced that “like in any di­vorce, the be­gin­nings are more dif­fi­cult and, if there are chil­dren in com­mon, we try to reach agree­ment lit­tle by lit­tle.” That’s why the an­a­lyst be­lieves there will be a ten­dency to­wards some dereg­u­la­tion to fa­cil­i­tate trade. “We may lose trade in the short term, but in the medium or long term it will re­cover and we will move to­wards greater mu­tual trust,” he pre­dicts.

Good prospects

Cat­alo­nia is ex­port­ing more than ever, a fact that has off­set the ups and downs in the do­mes­tic mar­ket. In­ter­na­tional trade can­not be ig­nored, and the great ad­van­tage, Or­riols points out, is the size of Cata­lan com­pa­nies, which are mostly “small and medium-sized, agile and flex­i­ble”. All in all, Or­riols be­lieves that while 2022 “is not the ideal year” every­thing will con­tinue in that di­rec­tion.

Xavier Fer­rer, chair­man of the In­ter­na­tional Eco­nomic and EU Com­mit­tee of the Col­lege of Econ­o­mists, is not aware of any “se­ri­ous prob­lems”. In Cat­alo­nia there are about 3,000 com­pa­nies, which ac­count for around 5% of ex­ports, and which trade with the UK on a reg­u­lar basis. How­ever, de­spite ini­tial ob­sta­cles, which have added to the lo­gis­ti­cal dif­fi­cul­ties aris­ing from the pan­demic, “all the pre­vi­ous in­for­ma­tion pro­vided by ad­min­is­tra­tions such as the Cata­lan gov­ern­ment and other in­sti­tu­tions and en­ti­ties, such as cham­bers of com­merce or em­ploy­ers, have min­imised the risks,” he says. The busi­ness world is ac­cus­tomed to adapt­ing to new cir­cum­stances: “There are more con­trols and de­lays, but the coun­try has not closed and if a prod­uct is needed, the cir­cuits work,” says Fer­rer.

The ex­pert points out that, like all be­gin­nings, those of Brexit have not been easy, es­pe­cially as they have been guided by a gov­ern­ment headed by Boris John­son, a leader “con­vinced that Brexit is the best op­tion, but who per­haps does not have the ideal at­ti­tude for deal­ing with a split of this na­ture.” The mem­ber of the Col­lege of Econ­o­mists em­pha­sises that, al­though the Brexit law is what it is, “man­ag­ing it in a spirit of un­der­stand­ing is not the same as doing it purely for one’s own ben­e­fit.”